The bank also raised its estimate for U.S. crude by $10.70 to $65.63 a barrel. Merrill's forecast stands at $60.

To be sure, J. P. Morgan now thinks Brent crude, the international benchmark for oil prices, will average $70 this year, with demand-driven oil price strength in the first half offsetting weakness in the back part of the year as drillers pump more oil.

"This 2018 is going to be a year of two halves. The first half is going to be a ... half of demand, and the second half is more about supply, which is coming back in reaction to the higher oil prices," Abhishek Deshpande, head of oil research at J. P. Morgan, told CNBC's "Power Lunch" on Monday.

Stronger-than-anticipated business activity, economic growth and consumer spending convinced Deshpande that oil demand will be better than expected in the first half of 2018. Brent prices will rise toward $78 a barrel in the first or second quarter of the year, he forecast in a research note released late last week.

Support for oil prices should last through the beginning of the summer, with strong prices prevailing through OPEC's next meeting in June. At the meeting, the 14-member oil cartel is scheduled to discuss its deal with Russia and other producers to limit oil output.

Higher oil prices could influence the producers' discussions about how to exit the agreement, which has supported oil prices by keeping 1.8 million barrels a day off the market since January 2017.

By the mid-year point, J. P. Morgan expects producers to start pumping more to capture the benefit of higher oil prices. This is particularly true for U.S. shale drillers, which use advanced technology to squeeze oil and gas from rock formations.

"The support in prices is clearly going to incentivize shale production, even more than what we had initially" thought, Deshpande said.

At $60 a barrel, J. P. Morgan expects U.S. shale production alone to increase by 1 million barrels a day in 2018. At $70, that growth increases by a multiple of 1.5 times, Deshpande said.

Morgan Stanley equity analyst Martijn Rats earlier this month raised his own Brent price forecast, but in the second half of the year. He sees futures reaching $75 in the third quarter.